The Search Landscape

Moderated by Gord Hotchkiss of Enquiro. Welcome to “an interesting look at what is happening in the search landscape.” 3 people from 3 different companies who’s job it is to analyze what people do online. Large room, about 75% full. (ended up full)

James Lamberti - comScore Networks

A few key themes and observations that comScore saw in 2005. Will focus on 3 key things: 1. Market growth continues, but showing signs of slowing down, saturation. 2. Continued lead of Google, and why. 3. Continued evaluation of the Internet as an ad platform. SEM is moving beyond its direct marketing roots.

Overall size of the market Q4 of 2006 vs. a year ago: queries grew by 8%. Seeing stability in overall US volume: 5.4 billion queries = about 40 searches per month. New/infrequent users are driving the growth. In an average month, an additional 10 million searchers are using the internet. Year over year growth for the category is slowing to just 5% growth in overall search activity in Dec 2005. Google is outperforming the market.

Broadband, however, is increasing rapidly. Jan 06: 63% in-home broadband penetration. 171 Million Americans using Internet. 20 days/month, total of 26 hours and viewed 2600 pages. Users grew by 5% and pages by 16% vs. a year ago. Over 85% of users conducted at least one search. 27% of time spent on communication sites. Increase in broadband usage is affecting content more than search. Broadband users are less reliant on portals (AOL, etc…), which is indicative of their greater sophistication. Rich medias all with greater reach as well as online banking, health, etc...

86% of search market is general web or local in nature. Vertical search is growing, but remains a fraction of the overall market. This suggests product development is far ahead of the average consumer.

Tracking the complex search market: 1. What metrics are you looking at: queries, result pages, clicks/referral? What is the population? US only? Worldwide? What are local shares in Canada and Europe . What location? Search ad networks? Of all web searches out there, about 12% are originating from toolbar.

Google continues to increase share, now 40% of US market. Increased penetration at Google is a key driver. Google’s reach increase appears to be driving share gains. G’s recent lead in the local space has allowed them to emerge as the market leader in the more recent months. Click rates have a positive multiplier effect on Google’s market performance. Both G and Yahoo are expanding ad coverage to increase search ad inventory. Both improved coverage in 2005 by over 15%: now just over 55% of SERPs have ads on them.

Sponsored vs. algorithmic clicks: AOL (24%) Paid clicks(!!!), and Google (13%), Yahoo (11%) MSN (8%) (these numbers are now accurate) (note however that the MSN paid search click percentage has dropped drastically since their old “look,” which almost “forced” users to click on the paid ads- according to James when I spoke with him briefly before the session).

Discusses the role of search in the buying cycle. Saw that only about 20% of conversion activity on a search platform occurred in the first session. More than one third of search influenced transactions occurred during weeks 5-8. ***Press release from comScore with key findings will be released later this week (not yet). Looked at 12 gift categories and linked buying behavior from online to offline.

Bill Tancer - Hitwise

According to Gord, he has promised a “bold prediction.” He introduces himself… his “loves” in this order: his wife, then “data”, then “search.” Check out blog: weblogs.hitwise.com. His numbers also support that G continues to grow, at a rate of 9.6% increase in market share of visits since June 2005. Yahoo and MSN lost market share at 11.5% and 15% respectively. (***note these market shares were based on overall Internet usage, with G at 3.67%, Y at 1.41%, and MSN at 1.15%) The top 3 search engines account for 74% of all visits to SE’s and directories (over 1600 sites within that category).

Another stat tracked: executed searches: G 63.1%, Y 25.2% MSN 5.1%, Ask 3.9%, others: 2.8%. (***Yahoo and MSN shares of market each decreased by 20%) Still feels that it is not “game over” for the others. Search usage is ubiquitous across all demographic groups. Slight diff among SE’s: Y users more likely to be under 35 years old. MSN users more likely to be over 35. Google users have slightly higher income.

Another stat he likes to track: clickstream data. Where people came from and where they went to afterwards. Likes to combine this with categorization such as shopping/classifieds, entertainment, business and finance, education, news and media, travel. Search engines are driving a large amount of traffic to shopping/classified: G 11.9% (up 28% since Dec 2004) Yahoo: 12.9%, MSN 12.2%. G (7.9%) and Y (6.7%) were both high in sending to Education sites compared to MSN (4.3%). MSN outshone the others with a 8.8% referal to Business & Finance.

Combined market share of “big three” portals’ search properties near 20% of all Internet visits. When examining market share of top 10 properties of G, MSN, and Y, we see a different story than G’s usual domination. Market share of visits to Yahoo properties over twice the size of MSN and Google properties. Yahoo total properties visits: 10.7%, MSN: 4.9% and Google: 3.9% How quickly can this be affected? As discussed/discovered in a conversation between Bill and Danny Sullivan: Nov 17, 2005, Google placed a “search on Google Books” link…overnight they became the 4th largest book property. Bill then shows a case study of “YouTube” video search property. They did a clip on “Saturday Night Live,” and very quickly surpassed G and Y video search in the period of a couple of weeks. Reminds him how volatile the space is, and that data must be closely looked-at.

Bold prediction: what is the most significant threat? Where is it coming from? He thinks that Ask is someone that has to be watched, but his “bold prediction” is that MySpace is the real property to watch closely. 1000% recent growth in market share of visits for the combined top 10 MySpace properties has yielded an astounding 5.25% of market share for all their properties! Larger than G and Y noted above.

Ken Cassar - Nielsen/NetRatings

“The State of Search Through a Worm’s Eye.” Starting to see clouds on the horizon, re: popularity of search. Wants to try and shed some light on search market but focusing on particular advertising vertical. Cornerstone of their market research offering is called the “MegaPanel.” A “surveyable” panel; allows for capture of all clickstream data as well as conversion incidences.

People are searching more, as noted above, from 30+ searches per person in 2005 to over 42 in 2006. Online activity made up of following: Communication: 41%, Content: 36%, Commerce 19%, Search 5%.

***Non-search referrals account for nearly twice as many referrals as search engines. 76% direct visits. 15% non-search referrals. Only 9% from search referrals. However, they have found that non-search referrals and search referrals account for equal dollars. Travel searches are heavily concentrated among the leading search terms. 47% use “top 100” search terms, and 53% use the remainder of all other search terms. Also, top 100 search terms heavily populated by URL searches. Again, just focused on travel vertical: Google search referrals 40%, Y 30%, MSN 12%, AOL 9%, other 9%.

Anyway you slice it, G is the dominant search engine. The impact of search is overstated by measures of reach and frequency, but understated by measures of time. Display advertising inventory is still relevant, even in commerce categories where brand impact is perceived as less important than direct marketing impact. While Y and G are best able to deliver reach, they are not always the most efficient sources of transaction info.

This is part of the Search Engine Roundtable Blog coverage of the New York Search Engine Strategies Conference and Expo 2006. For other SES topics covered, please visit the Roundtable SES NYC 2006 category archives.